Sterling (GBP) forecast
Trade has been very quiet over the last week, with little movement for GBP exchange rates. Parliament has also been on holiday, so the absence of any developments with Brexit talks have also left the Pound unappealing, causing exchange rates to remain relatively range-bound. Things are now likely to get busier as the week presses on. There are likely to be developments with Brexit talks in the next few weeks, and I think that the UK confirming a closer tie with the EU as part of the Brexit deal could help the Pound rise as we enter May. In terms of data, there is little on the calender for the week ahead, but in any case the currency markets see Brexit as more important, so until we get any clues as to the next steps, GBP/EUR is likely to remain in the mid €1.15’s.
Euro (EUR) forecast
GBP/EUR rates have also been kept bouyed by weakness in the single currency. The outlook for the Eurozone economy is not very good at the moment, and investors are not keen on buying the single currency while these fears remain. There are fears that the European Central bank may need to continue stimulating the Eurozone economy, helping to keep the Euro weak. If it were not for this Euro weakness, GBP/EUR rates would likely be lower than they currently are. As with the GBP outlook above however, any significant moves for Pound/Euro will likely be driven by what happens with Brexit over the coming weeks.
US Dollar (USD) forecast
In contrast to the weak Euro, the US Dollar has strengthened of late. This is evident what you see that the GBP/USD rate has fallen from $1.32 to $1.29 over the course of the last 4 weeks. The main reason for the stronger (and therefore more expensive) USD is due to it’s safe haven status. Events over the weekend in Sri Lanka have caused investors to seek relative safe currencies like the USD. Trade war fears have also helped to keep the USD stronger than it would otherwise be. If we see a Brexit deal agreed in the coming weeks, then it’s likely GBP/USD will recover above it’s recent highs of $1.32..
Australian Dollar (AUD) forecast
As my colleague Michael recently pointed out, GBP/AUD rates have fallen recently. Despite the Aussie weakening on expectations that Austrlian could cut interest rates again, it has not helped the GBP/AUD pair recover. The reason for this is, youv’e guessed it, Brexit. It’s the driving force for GBP exchange rates at the moment, and is likely to remain so until we see a deal agreed.
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